CCHBC bondholders losing faith in planned Greek exit

Coca-Cola Hellenic Bottling Co SA bondholders are losing confidence in the firm’s plan to leave Greece on concern the cost of the move will trigger a credit rating downgrade for the nation’s biggest company.

The extra yield investors demand to own Coca-Cola Hellenic’s most-traded notes over the safest government debt plunged one percentage point on October 12, the day after the company said it planned to move its headquarters to Switzerland.

Since then, the spread on the 4.25 percent bond due 2016 has widened by 0.61 percentage point to 232 basis points.

While the world’s second-largest Coke bottler says it will get cheaper funding by exiting a nation that has contracted for 17 quarters as strikes and protests against austerity measures paralyze the economy, the notes have lost almost 60 percent of the gain on speculation the move will add too much debt.

Moody’s Investors Service says Coca-Cola Hellenic may need to borrow a half-billion euros, about twice its net income in the first nine months of 2012, and jeopardize its Baa1 rating.

“The change of headquarters is good for the company since it reduces the risk of higher taxes or nationalization, but it deteriorates its liquidity position because of the costs,” said Ramon Nieto, a fund manager at Geroa EPSV Fondos in San Sebastian, Spain.

The firm oversees 1.1 billion euros and used to hold Coca-Cola Hellenic’s bonds.

“Even with the recent increase in the yield, it’s not attractive enough for us to buy them.”


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